(2015-16) Volume 30 Inland Revenue Board of Review Decisions

(2015-16) VOLUME 30 INLAND REVENUE BOARD OF REVIEW DECISIONS

Case No. D1/15

Salaries tax – appeal against assessment – lodging an appeal to the Board out of time – whether leave should be given – section 66(1A) of the Inland Revenue Ordinance (‘IRO’)

Panel: Chui Pak Ming Norman (chairman), Liu Kin Sing and Yuen Miu Ling Wendy.

Dates of hearing: 26 February 2015.

Date of decision: 15 April 2015.

The Appellant objected to the Commissioner’s Additional Salaries Tax Assessment on the bonus he received from his employer for the 2008/09 year of assessment. The Commissioner rejected the Appellant’s objection in a written Determination dated
2 September 2014. It was accompanied by a letter from the Commissioner on the same date setting out the details for lodging an appeal. The Appellant wrote to the Commissioner on
24 September 2014 requesting the Commissioner to reconsider the Determination. The Commissioner replied by letter on 30 September 2014 stating that he already considered the facts fully in the Determination. He further advised the Appellant that if he wished to pursue the objection further, the proper procedure was for him to lodge an appeal in writing to the Board of Review (‘the Board’) under section 66 of the IRO, within 1 month of the Determination. The Appellant filed a notice of appeal to the Board on 9 October 2014. He explained that he was misled by his then tax consultant that he should write to the Commissioner for lodging an appeal and for an extension of time. He also claimed that an extension of time for several days was not unreasonable, given the matter was dragged on for more than 3 years. The Board considered as a preliminary issue whether leave should be granted to the Appellant to file his notice of appeal out of time.

Held:

1.  According to section 66(1A) of the IRO, the Board could only give leave to the Appellant to file his notice of appeal out of time if he was prevented by illness or absence from Hong Kong or other reasonable cause from giving notice of appeal within the statutory period. The word ‘prevented’ should be understood as meaning ‘unable to’. Whilst it was a less stringent test than the word ‘prevent’, it still imposed a higher threshold than mere excuse in order to give proper effect to the rigour of time limit under the IRO (Chow Kwong Fai v Commissioner of Inland Revenue [2005] HKLRD 687 referred).

2.  Absence from Hong Kong does not automatically confer a right for extension of time (D19/01, IRBRD, vol 16, 183; D44/11, (2012-13) IRBRD, vol 27, 768 referred). It was not sufficient for the taxpayer to show that his failure to lodge an appeal within time due to illness, absence from Hong Kong or other reasonable cause. The taxpayer must also satisfy the Board that he was prevented by such illness, absence or reasonable cause to lodge an appeal within time (D33/07, (2007-08) IRBRD, vol 22, 791; D55/09, (2009-10) IRBRD, vol 24, 993; D35/12, (2012-13) IRBRD, vol 27, 768 referred).

3.  Unilateral mistake on an appellant’s part could not be properly described as a reasonable cause which prevented him from lodging the notice of appeal within time (Chow Kwong Fai v Commissioner of Inland Revenue [2005] HKLRD 687 referred). A careless mistake on the appellant’s part resulting in a notice of appeal being sent to the wrong party could not constitute a reasonable cause (D139/00, IRBRD, vol 16, 34 referred). Similarly, delay attributed solely to an appellant’s failure to read properly the letter accompanying a determination was not a reasonable cause (D2/03, IRBRD, vol 18, 301 referred).

4.  The Appellant did not suffer from any illness during the statutory period for lodging the notice of appeal. He was in Hong Kong for 20 days during that period, and could give notice of appeal within time by himself or by engaging a representative to give on his behalf. He was not prevented from filing a notice of appeal within time by illness or absence from Hong Kong.

5.  There was no reasonable cause preventing the Appellant from lodging the notice of appeal within time. The emails exchanged between the Appellant and Company A showed that the advice given to the Appellant was that the appeal should be lodged with the Board. He was not misled.

6.  Further, the Appellant’s letter on 24 September 2014 did not amount to a notice of appeal or a request for an extension of time as it simply asked the Commissioner to reconsider the Determination.

7.  Since the tax representative was engaged by the Appellant, the mistake, if any, as to the party with which to file the notice of appeal was unilateral and made solely on the Appellant’s part. It did not amount to any reasonable cause.

8.  As the details of time limit and procedures for an appeal were set out in the Commissioner’s letter dated 2 September 2014, there was no obligation on the Commissioner’s part to remind the Appellant the same again. The Appellant’s argument that he could only read the Commissioner’s letter of
30 September 2014 on 6 October 2014 was irrelevant.

9.  The only conclusion was to dismiss the Appellant’s application for leave to grant him an extension of time to file the notice of appeal against the Determination. Since there was no proper appeal before the Board, the Additional Salaries Tax Assessment should stand.

Appeal dismissed.

Cases referred to:

Chow Kwong Fai v Commissioner of Inland Revenue [2005] HKLRD 687

D33/07, (2007-08) IRBRD, vol 22, 791

D55/09, (2009-10) IRBRD, vol 24, 993

D35/12, (2012-13) IRBRD, vol 27, 768

D19/01, IRBRD, vol 16, 183

D44/11, (2012-13) IRBRD, vol 27, 768

D139/00, IRBRD, vol 16, 34

D2/03, IRBRD, vol 18, 301

Appellant in person.

Lam Cheuk Lun Aaron, Government Counsel of the Department of Justice for the Commissioner of Inland Revenue.

Decision:

Introduction

1.  The Respondent first raised on the Appellant the 2008/09 Salaries Tax Assessment on the basis of the Appellant’s Tax Return. Upon consideration of further information and documents furnished by the Appellant’s employer, the Respondent became aware of an additional assessable income (being bonus) received by the Appellant. As such the Respondent raised on the Appellant an Additional Salaries Tax Assessment dated
2 February 2010, which was subject of the Appellant’s objection.

2.  After considering the documents and submission made by the Appellant to the Respondent on the Appellant’s grounds of objection, by a letter dated 2 September 2014, the Respondent notified the Appellant that he was unable to agree with the objections, under which a written determination also dated 2 September 2014 was enclosed to the Appellant.

3.  On 24 September 2014 the Appellant wrote to the Respondent expressing his view on the determination and making further submission on the determination. That letter was received by the Respondent on 25 September 2014.

4.  By the letter dated 30 September 2014, the Respondent replied that the Respondent has fully considered the facts of his case and reached the decision by issuing a determination on 2 September 2014 to him under section 64(4) of the Inland Revenue Ordinance (‘Ordinance’). The Respondent further advised him that if he wishes to pursue the objection further, the proper procedure is for him to lodge an appeal to the Board of Review (‘Board’), an independent statutory body from the Inland Revenue Department, according to section 66 of the Ordinance. In the said letter, the Respondent also drew the Appellant’s attention that an appeal to the Board must be given in writing within one month after the transmission to him of the Respondent’s determination. The Respondent also drew his attention that for further details of lodging the appeal, he may refer to paragraph 3 of the Respondent’s covering letter also dated 2 September 2014 and that an appeal to the Board of Review must be given in writing within one month after the transmission to him of the Deputy Commissioner’s determination and according to section 68(1B) of the Ordinance, settlement of an appeal had to be endorsed by the Board.

5.  The Appellant subsequently filed a notice of appeal to the Board which was received by the Board on 9 October 2014. On 10 October 2014, the Clerk of the Board wrote back to the Appellant informing that the notice is prima facie invalid as it falls outside the statutory 1-month period and the Appellant may wish to consider invoking the jurisdiction of the Board to grant the Appellant an extension of time.

6.  By a letter dated 22 December 2014 from the Clerk to the parties, the Clerk informed the parties the date of hearing and that the Board will, at the hearing, hear the Appellant’s application under section 66(1)(b) of the Ordinance for leave to give notice of appeal to the Board out of time. In the said letter, it was also mentioned that should the Board grant the Appellant leave, another hearing will be fixed to hear the appeal.

The Issue at the hearing scheduled on 26 February 2015

7.  It follows that the hearing taken place on 26 February 2015 was limited to the preliminary issue whether or not leave should be granted to the Appellant to file his notice of appeal to the Board out of time.

The Undisputed Facts

8.  The following facts were not disputed by the parties:

(a)  The Respondent’s letter and the determination, both dated
2 September 2014 was received by the Appellant on
3 September 2014.

(b)  In the Respondent’s letter dated 2 September 2014, the Respondent had advised the Appellant’s right of appeal under section 66 of the Ordinance and an extract of the said section 66 was also annexed in the said letter. In the said letter, the Respondent also, amongst others, informed the Appellant that the notice of appeal has to be given to the Clerk to the Board and must be given within one month after the transmission to him of the written determination. The Appellant was also advised of the address, opening hours and contact details of the Clerk to the Board in the said letter.

(c)  The deadline for the Appellant to file his notice of appeal expired on
3 October 2014.

(d)  The notice of appeal dated 7 October 2014 was received by the Board on 9 October 2014.

(e)  There was no issue of illness on the part of the Appellant during the period from 3 September 2014 to 9 October 2014.

(f)  During the period from 3 September 2014 to 9 October 2014, the Appellant was present in Hong Kong save for the following periods:

(1)  17 September 2014 (from 12:26 p.m.) to 18 September 2014
(7:48 p.m.);

(2)  26 September 2014 (from 10:34 p.m.) to 6 October 2014
(7:05 a.m.)

Appellant’s Evidence and Submission

9.  Basically, the Appellant said that he did not quite understand the procedure of lodging an appeal and that he was ill-advised or misled by Company A, his then tax consultant that he should write to the Respondent for lodging an appeal and for an extension of time. He produced certain e-mails exchanged between Company A and him between
17 September 2014 and 23 September 2014 to support his claim.

10.  He relied on his e-mail dated 22 September 2014 to Ms B of Company A in which he wrote ‘in the interim you (Ms B) will ask the Respondent for additional time’. However by an e-mail from Ms B to the Appellant dated 23 September 2014, Ms B of Company A wrote in reply ‘referring to our discussion this afternoon, we (Company A) understand that you (the Appellant) will write to the IRD yourself in response to their determination issued on 2 September 2014.’

11.  The Appellant’s claim of lacking of knowledge of the lodging an appeal was contradicted by the Respondent in his cross-examination that detailed procedure of lodging an appeal as well as the statutory requirement of lodging an appeal within 1-month upon the transmission of the determination were clearly stated in the Respondent’s letter dated 2 September 2014 to the Appellant.

12.  Lastly the Appellant submitted that since the matter had been dragged on for more than 3 years before the determination was made on 2 September 2014, the extension of several days to enable him to file the notice of appeal out of time is not an unreasonable request.

Respondent’s Submission

13.  The Respondent referred the Tribunal to section 66(1A) which stipulates inter alia:

‘ If the Board is satisfied that an appellant was prevented by illness or absence from Hong Kong or other reasonable cause from giving notice of appeal in accordance with subsection (1)(a), the Board may extend for such period as it thinks fit the time within which notice of appeal may be given under
subsection (1).’

14.  The Respondent submitted that only under 3 circumstances in which the Board could exercise its discretion under section 66(1A) to give leave for the Appellant to file his notice of appeal out of time, namely, he was prevented by illness or absence from Hong Kong or other reasonable cause from giving notice of appeal within the statutory period.

15.  As to the issue of illness, the Respondent submitted that it was common ground that the Respondent did not have illness in the relevant period.

16.  As to the issue of absence from Hong Kong within the statutory period, it was the Respondent’s submission that during the statutory period in question (i.e. between
3 September 2014 and 3 October 2014), the Appellant was present in Hong Kong for about 20 days and there was ample time for the Appellant to file the notice of appeal within the statutory period. The Respondent argued that the Appellant’s absence in Hong Kong for about 10 days during the statutory period could not prevent him from filing the notice of appeal.